'ShambaShield'—Delivering inclusive finance and climate-smart solutions to Kenyan farmers

Millions of resource-poor smallholder farmers feed and nourish the people of Kenya. Yet they face an ever-more unpredictable and extreme climate. ShambaShield is developing solutions that will integrate financial protection, edutianment and information services to equip half a million Kenyan farmers with the tools they need to thrive in a changing climate.

What is ShambaShield?

The ShambaShield project has an unusual ambition. It aims to serve several of the most critical needs of small-scale farmers in East and Southern Africa. These are to access the financial services and agricultural advice needed to increase farm productivity and farm resilience to climate change.

ShambaShield aims to leverage three innovations to create a resilient and inclusive financial ecosystem for farmers. It is not a quick fix, but rather a thoughtfully designed package of solutions that enhance farmers' productivity and resilience to climate change. It will provide three integrated core innovations. These are (1) Climate-Credit Scoring Tool that assesses the creditworthiness of farmers by incorporating climate risk factors, which is making it possible for more farmers to access loans for the first time; (2) a Risk Contingent Credit financial product that integrates credit with weather risk insurance, which builds a safety net right into the loans, reducing risks for both farmers and lenders; and (3)  Digital Agro-Advisory Services and Edutainment Shows that send practical farming tips and financial guidance straight to farmers' phones. This integrated and comprehensive approach, which enhances at one and the same time farmers' financial literacy, access to credit and farm practices, will makes it easy for farmers to get the services and information they need.

The whole idea behind ShambaShield is to bundle innovations together to cover a range of risks that farmers face. For example, we want to make credit more available to small-scale farmers. But because farmers sometimes face catastrophic risks, which are not manageable, we link in the third component of our innovation package, which is insurance to cover the high risks that farmers face.

Climate-proofing smallholder farming

For many smallholder farmers, accessing credit has always been an uphill battle. Financial institutions often consider them high-risk due to their small-scale operations, lack of formal financial records, and high likelihood of non-performing loans. ShambaShield's climate-smart credit assessments make these farmers more attractive to lenders. The Climate-Credit Scoring Tool, developed with partners like CGIAR's Alliance of Bioversity International and the International Center for Tropical Agriculture (CIAT) and Financial Access, not only helps farmers secure loans but also equips them with knowledge to improve their creditworthiness over time.

The old ways of assessing risk and providing financial services were not built for handling the extreme weather events we're seeing more and more. That's one reason ShambaShield's Climate Credit Rating Score is so innovative. It's building in safeguards from the beginning. 

Helping farmers meet their financial challenges

Risk Contingent Credit embeds insurance protection (a substitute for collateral) within a financial product. The loans farmers receive allow them to purchase improved farm inputs such as seeds, fertilizer, chemicals, and irrigation equipment. If the embedded insurance mechanism is triggered by, say, drought or flood, the farmers’ repayment obligation is reduced. If the insurance is not triggered, the farmers pay an extra premium making the contract actuarially fair for both parties. Risk Contingent Credit not only gives women and other marginalized smallholders access to credit but also helps to prevent them from falling into credit-driven poverty.

Shamba Shape Up

ShambaShield is delivering information on climate adaptation, financial literacy and best agricultural practices through platforms like the popular television show Shamba Shape Up and its iShamba mobile service, which reaches 1.2 million farmers annually. The Shamba Shape Up 'edutainment' TV show is an effective way to reach people. It engages with real farmers and their problems not in a TV studio but in farmers' fields. Many Kenyans watch the show and make better decisions because of it. ShambaShield also employs radio programs, podcasts and mobile apps to meet people where they are, using those communication channels that are already part of their lives. And these digital platforms allow for two-way interactions. Farmers can ask questions, share their experiences, and learn from each other. Such agro-advisories play a big part in giving farmers the knowledge and tools they need to manage climate risks themselves. Giving farmers real-time information and advice helps them to adapt to changing conditions and adopt more climate-smart practices.

Many farmers we talk to have no idea about how to even begin a loan process. They're unfamiliar with banking systems, with the importance of record keeping or even the importance of declaring assets. There is a huge gap between what exists in the market and what farmers know. We’re working to bridge that gap with the Shamba Shape Up TV show, which enhances farmers' financial literacy in a fun and accessible way. 

Achievements made possible by the Ukama Ustawi Scaling Fund

ShambaShield is supported by the first round of a Scaling Fund provided by the CGIAR Initiative on Diversification in East and Southern Africa (Ukama Ustawi) and by two other CGIAR Initiatives—Climate Resilience (ClimBer) and Livestock and Climate. As one of the winners of the 2024 Ukama Ustawi Scaling Fund, ShambaShield received $125,000 and invaluable support from CGIAR scaling experts. This Fund has been instrumental in expanding ShambaShield's impact to reach more smallholder farmers across Kenya. It has supported the development and refinement of the key components—the Climate-Credit Scoring Tool, Risk-Contingent Credit, and Digital Agro-Advisory Services. These efforts have allowed ShambaShield to bridge the financing gap for smallholders, helping them access affordable credit and insurance products.

Through the Scaling Fund, ShambaShield has forged strategic partnerships with organizations such as Financial Access Consulting Services, Safaricom's Digifarm, Family Bank, the Mediae Company and the Kenya Meteorological Department. These partnerships are crucial in aligning efforts to strengthen ShambaShield's offerings and extend its reach to farmers. They will contribute to further refining these products, as well as developing a strategic scaling plan to expand the use and impact across East and Southern Africa.

The Scaling Fund 'Innovation Packages and Scaling Readiness' Workshop

A workshop on 'Innovation Packages and Scaling Readiness' made possible by the Scaling Fund was held earlier this year (May 2024) with financial agents and agricultural scientists and policymakers. These experts explored the potential roadblocks to making ShambaShield work in the real world. Funding is a big one. Scaling up a program like this takes a lot of money. And a lot of financial institutions are hesitant to work with smallholder farmers because of the risk that the farmers will default on their loans. Another challenge is the limited awareness among farmers regarding the available loan opportunities. Then there is the challenge of collecting and using all this farmer data responsibly, protecting the privacy of the farmers, and technical challenges, such as integrating different data systems. Rather than shying away from such complexity, the participants actively thought through these challenges, planned for them and looked for solutions.

The workshop participants also determined the 'enablers'—the things and factors and people and organizations that can help ShambaShield succeed. These include 'experiential learning labs' or 'living learning laboratories', where farmers can go to get hands-on experience with new technologies and farming practices, and employing gender inclusive models to ensure that women as well as men benefit from ShambaShield. This project is ensuring that the specific needs of women and youth as well as men are met. By improving financial literacy and providing more equitable access to financial resources, ShambaShield aims to level the playing field in and for traditionally marginalized communities.

While the individual components of this package are ready to go, the whole package isn't available yet; the innovators are still working out the strategy to bring it all together. The workshop report went into detail about that scaling strategy. Three pivotal work areas emerged from this initiative, shaping the way forward: 1) groundwork, including business model analysis, 2) user research based on human-centered design principles and cognitive mapping, and 3) a scaling strategy.

What we’re working on now is to develop a really solid scaling strategy and proposal for the ShambaShield innovation.

Recent outcomes

Recent ShambaShield outcomes highlight significant progress, including foundational work to understand bottlenecks and develop solutions. Key achievements include a) Developing a playbook for a digital bundled financial solution, and b) Creating behavior-focused advisory recommendations to address challenges faced by two insurance providers, benefiting 5,000 livestock keepers.

The pilot phase has reached 1,200 dairy farmers (61% of whom are women), while scaling efforts involve partnerships with Digifarm (Kenya), Africa Rural and Agricultural Credit Association, Kenya's Agricultural Finance Corporation, and various microfinance institutions. These partnerships are expected to impact over 200,000 dairy and mixed farmers. Additionally, Shamba Shape Up is reaching up to 1.2 million viewers in season 14, delivering valuable climate-smart and financial literacy content.

Toward a more resilient future

ShambaShield is a new approach to addressing the challenges faced by smallholder farmers in Kenya. By bundling financial protection, climate-smart tools, and agro-advisory services into a single package, it will provide a pathway to greater resilience, sustainability, and financial stability. With the potential to unlock new opportunities for smallholder agriculture, ShambaShield is creating a future where farmers can confidently invest in their farms and weather the challenges of climate change.

Banner image: A Kenyan farmer growing and selling Brachiaria grass for livestock feed (photo credit: Muthoni Njiru/AVCD).